Vince Cable has warned "unscrupulous employers" that he would ban clauses in zero-hours contracts that prevent workers from accepting shifts with more than one employer.

The business secretary said legislation to be introduced Wednesday would give more flexibility to workers currently forced by draconian contracts to work for a single employer even when they get few paid hours.

But Labour and anti-poverty groups accused him of letting down people on the fringes of the workforce who suffer insecure employment, with plans for only limited improvements in workers' rights.

Cable was reacting to a growing clamour for controls on the explosion in zero-hours contracts since the financial crisis. Official estimates put the number of such contracts at 1.4m, with another 1.3m that were inactive in the three weeks in January when employers' books were checked by assessors.

Following a six-month consultation, Cable said employees on zero-hours contracts will have the freedom to find work for more than one employer.

Exclusivity clauses can prevent an individual from working for another employer, even when no work is guaranteed. Cable said a ban on them, which is set to benefit 125,000 zero–hours contract workers, is part of a bid to clamp down on abuses in the workplace.

"Zero-hours contracts have a place in today's labour market. They offer valuable flexible working opportunities for students, older people and other people looking to top up their income and find work that suits their personal circumstances," he said.

"But it has become clear that some unscrupulous employers abuse the flexibility that these contracts offer to the detriment of their workers. Today, we are legislating to clamp down on abuses to ensure people get a fair deal."

Critics have argued that the growth of zero-hours contracts, which offer workers no guarantee of a minimum number of hours, illustrates the growing reliance of employers on an army of insecure workers whose income can rise and fall weekly.

A spokeswoman for campaign group 38 Degrees said: "A ban on exclusivity in zero-hours contracts is a good first step, but it doesn't nearly go far enough.

"Why, when over 35,000 members of 38 Degrees wrote to Vince Cable asking that employees get better notice of when they are working, that employers make sure contracts are not used as a discipline tool and that businesses are encouraged to make zero-hours contracts the exception, not the norm, haven't these areas been addressed too?"

Chuka Umunna, Labour's shadow business secretary, said the government was presiding over a "rising tide of insecurity" that had turned zero-hours contracts into the norm in parts of the economy. "The Tory-led government has watered down people's rights at work and failed to match Labour's plans to outlaw zero-hours contracts where they exploit people.

"Labour will ensure that people at work get a fair deal and proper protections so they are not forced to be available around the clock, are paid if shifts are cancelled at short notice and are able to demand a full contract if, in practice, they are working regular hours."

Cable said he would consult further on how to prevent rogue employers evading the exclusivity ban, for example through offering one-hour fixed contracts.

He has warned that most attempts to control rogue employers will founder without strict policing. He said his department would work with unions and employer groups to try to limit the scope for evasion with possible amendments to the small business, enterprise and employment bill that will include the exclusivity ban.

Tim Thomas, head of employment Policy at EEF, the manufacturers' organisation, said it was necessary for manufacturers, where skills are in scarce supply, to use zero-hours contracts.

"The way forward [in the bill] treads a fine line between supporting the majority of workers who want to continue to work on their zero-hours contracts and limiting their use where they are neither necessary nor appropriate."